Malaysia is ready to launch the country’s largest real estate investment, the multi-billion-dollar Bandar Malaysia project, which is ready to showcase the country’s growing economic ties with China.
Businessman Lim Kang Hoo, whose Iskandar Waterfront Holdings (IWH) secured the rights to be the project’s lead developer together with China Railway Engineering Corp (CREC) in late 2015, noted that initial financing of CNY 10 billion (S$3.2 billion) has already been secured.
He added that groundwork for the infrastructure expansion would begin as soon as “two or three loose ends” were sorted out with the Malaysian and Chinese governments in the approaching weeks.
“It took a really very long time to satisfy the conditions, corresponding to Bank Negara’s (Malaysia’s central bank) approvals for foreign loans and land degazettement. But we’re almost done,” Tan Sri Lim told The Straits Times last week before heading to Beijing to satisfy his Chinese bankers, who will provide a lot of the initial financing for the project.
Set on 196.7 hectares of prime real estate that currently includes an airstrip, military barracks and other military installations on the outskirts of Kuala Lumpur, Bandar Malaysia will likely be a purpose-built integrated township with residential complexes, underground shopping malls, a financial centre and indoor amusement parks. It may even be the terminus of a planned high-speed rail link between Kuala Lumpur and Singapore.
Separately, Beijing-based CREC is proposing to construct an RM8.3 billion regional headquarters in a brand new township that promoters say will generate a gross development value of RM160 billion over a 25-year construction schedule. The massive undertaking comes at a time when concerns are growing that Kuala Lumpur could experience a severe industrial property glut within the near future.
Just outside the town of Bandar Malaysia, developers have begun work on a brand new financial district called Tun Razak Exchange (TRX), which is able to encompass some 28ha of high-value real estate.
Property expert Ho Chin Soon noted that the expected glut within the property sector is unlikely to discourage developers like CREC. “For large Chinese firms operating overseas, market conditions are irrelevant in the case of acquiring property without cost.
They see land as a really priceless commodity and so they imagine conditions will change,” he said. Both Bandar Malaysia and TRX are directly linked to the federal government’s ongoing efforts to deal with the huge debt burden at scandal-plagued 1Malaysia Development Berhad (1MDB), a sovereign wealth fund whose international money flows have sparked government investigations in at the least six countries.
1MDB acquired properties including TRX and Bandar Malaysia from the federal government at a reduced price after which sold the plots for joint development with the private sector as a part of a debt reduction plan.
Australia’s LendLease International and Indonesia’s Mulia Group invested within the TRX development together with several other Malaysian state-owned entities in deals that collectively raised greater than RM2.7 billion for 1MDB. IWH and CREC won a world tender to secure the rights as master developer of Bandar Malaysia with a bid of RM7.41 billion to amass a 60% stake within the project from 1MDB.
The Malaysian government owns the remaining 40 percent. The Malaysian-Chinese three way partnership, split 60-40 between the 2 partners, paid a ten percent down payment when it won the bid in December 2015. The rest will likely be paid in the approaching months as bureaucratic issues are resolved, Mr. Lim said.
The bulk of the financing will come from a consortium of banks led by Industrial and Commercial Bank of China and a bunch of local financial institutions corresponding to Malayan Banking, CIMB and RHB, he added. In the primary phase of development, the three way partnership will take ownership of one-third of the entire area of Bandar Malaysia, consisting mainly of the runway of the military air base.
According to Mr. Lim, ownership of the remaining land will likely be transferred over the following two years as various military installations are relocated to recent designated sites across the country. “Once we take ownership of the runway land, all the systems will be in place and I can sign land sale agreements with various parties. Right now, we have 58 parties in the queue,” he said.
Source : AsiaOne.com.sg
